The opioid epidemic persistently plagues government at all levels, despite significant efforts to identify and stop bad actors. But more shockingly, it wasn’t just opioids prescribed by so-called ‘pill mill doctors’ that accounted for most of the healthcare fraud in the last six-month reporting period. Surprisingly, medical braces played a starring role in the most recent and significant take-down of medical fraudsters in Health & Human Services (HHS) history.

Following Healthcare Fraud Trends

Why should we pay attention to enforcement actions? Following these trends can help lawmakers, regulators, law enforcement, healthcare practitioners, and consumers become better aware of the problem and how to combat it. One way to stay up-to-date is to read the HHS Office of Inspector General (OIG)’s Semiannual Report to Congress. The report highlights successful criminal and civil enforcement actions including the investigative work the agency has been doing.

The 2019 reports provided significant insights into the OIG’s investigative work including how much money the agency is expected to recover — a whopping $2.3 billion dollars — and how many criminal actions — 421 — occurred in the reporting period. The entire report covered October 1, 2018 through March 31, 2019.

Medical Braces, Scams & Shell Companies

The OIG dismantled one of the largest healthcare fraud schemes ever investigated in Operation Brace Yourself. The alleged scheme involved almost $1 billion paid for medically unnecessary orthopedic braces furnished through a telemarketing scam to seniors. The brace manufacturers were allegedly bribing doctors and paying them monetary kickbacks in exchange for Medicare patient referrals that resulted in medically unnecessary braces.

The criminal proceeds were then laundered through international shell companies, allowing the perpetrators to do what any good money launderer would do: buy exotic cars, yachts, and luxury real estate in the United States and overseas, according to one report.

Excluding Nefarious Practitioners and Assessing Civil Penalties

The OIG also excluded nearly 1,300 individual and entities from participating in federal healthcare programs. It also took civil actions, including assessing civil monetary penalties against nearly 330 individuals or entities.

In addition to its enforcement efforts, OIG audits identified $496 million in expected recoveries and $247 million in questioned costs. The costs were questionable because of alleged violations, inadequate documentation, or fund expenditures that were unnecessary or unreasonable. The OIG also made 212 new audit and evaluation recommendations with 186 recommendations implemented by HHS operating divisions.

More Enforcement Actions: Pre-Filled Syringes, Home Health Services & More

Numerous enforcement actions were pursued by the OIG and others, including:

A clinic owner and physician were convicted for their involvement in a scheme to defraud Medicare by falsely certifying patients’ medical conditions and need for home health services. They were sentenced to a combined 55 years in prison and ordered to pay up to $26.7 million in restitution.

Greenway Health, a health information technology software company, entered into a FCA settlement agreement to pay $57.25 million and enter into a five-year agreement with the OIG related to the company’s software. The settlement resolves Greenway’s FCA liability for allegedly: i) falsifying representations during the HHS Office of National Coordinator for Health Information Technology certification process for the company’s “Prime Suite” software product; ii) knowingly causing Prime Suite users to report inaccurate information regarding “meaningful use”, and iii) providing improper remuneration to some healthcare providers to continue using Prime Suite or recommending it to others.

In Virginia, the owner and manager of a sleep clinic were convicted for their roles in a conspiracy to defraud Medicare, TRICARE, private insurance, and the IRS of more than $10 million. The defendants directed their employees to solicit patients for medically unnecessary supplemental studies. To conceal the scheme, the defendants directed their employees not to send study results to the patients’ doctors, lied to patients that they did not have to pay copays or coinsurance, and used the original doctors’ information on health insurance claims without permission. The defendants were sentenced to a combined nine years and 11 months in prison and ordered to pay $10.6 million in restitution.

Two Detroit-area home health agency owners were sentenced to a total of 16 years in prison for billing Medicare for home health services that were never provided. The two were ordered to pay restitution of $9.6 million and $4.4 million, respectively.

A California physician assistance was found guilty in a scheme to unlawfully distribute prescription drugs. The individual was convicted of 39 counts of unlawful distribution of controlled substances and sentenced to 10 years in prison.

A Kentucky physician was found guilty of healthcare fraud for implanting medically unnecessary pacemakers into 24 patients in order to bill for the unnecessary procedure and the follow-up care. The physician’s patients testified that they had been pressured into having the procedures and given misleading information. The physician was sentenced to 3 years and 6 months in prison and ordered to pay $275,515 in restitution.

In addition to its enforcement efforts, the OIG also made other recommendations, including:

Since fiscal year 2004, the OIG has reported over $53 billion in expected investigative recoveries, excluded nearly 51,000 individuals and entities from participating in federal healthcare programs, prosecuted over 11,000 criminal actions against individuals and entities and took nearly 7,300 civil actions.

Gina Jurva, Manager of the Corporates and Government enterprise content platform for Thomson Reuters, contributed to this blog post.

Melissa D. Berry is a principal attorney editor with Thomson Reuters. Melissa started with the company in 2000 and has worked on insurance compliance, health law and healthcare compliance products during that time. She currently leads Health Policy Tracking Service (HPTS) and oversees topic development as well as writing on various healthcare and health insurance subtopics. She is also a regular contributor to Thomson Reuters publications on healthcare and insurance related topics.

Melissa is a 1993 graduate of the University of Akron School of Law and is licensed to practice in Ohio. She is also a member of the American Health Lawyers Association and Public Justice.